EEF, the manufacturer’s Industry peak body, has urged the Government to ensure barrier free trade as the UK realigns its trade agreements after leaving the European Union.
Research gathered by EEF shows many of Britain’s export destinations are more protectionist than before the 2008 financial crisis, and these barriers are impacting on exports.
EEF’s report ‘Global Trade - Run Aground or Structurally Sound’ argues that it will take more than demand growth to sustainably overturn the British balance of payments.
The body hopes the Government can ensures barrier-free access to the EU as part of any deal on Brexit, whilst working to secure further liberalisation in partnership with the rest of the world.
The report has found that world trade volumes have dropped a fifth against pre-financial crisis trends, after nearly a decade. Britain’s average export growth since the banking crash is around a quarter of that in the previous 12 years.
Protectionist tendencies were found to be on the rise around the world, with China’s government intervening on behalf of its local businesses to the detriment of one in six UK manufacturers, and a tenth of sellers to the US experiencing an increase in tariffs.
Manufacturers maintained that the EU remains of overwhelming importance, with proximity to market and tariff-free trade regarded as advantages.
Exports growth has dragged since the financial crisis, with an annual average volume growth of of 1.3 per cent per year, compared with average rates of 5.1 per cent in the decade prior.
EEF said the availability of trade finance, once seen as the catalyst for trade activity, has also declined significantly as a result of shocks to the international financial system. This has impacted on one in five manufacturers.
At the moment weaker sterling and strengthening global markets are sustaining a pick-up in export sales for UK manufacturers who are also benefitting from frictionless access to EU and good growth dynamics in emerging markets.
Lee Hopley, EEF Chief Economist, said: “Exports remain fundamental to the performance of UK industry and the economy overall. In recent years, however, the world economy has been transformed in the wake of the financial crisis. As a result, the pace of world trade has been held back not just by weak demand but by an increase in protectionism leaving manufacturers facing increasingly complex hurdles in overseas markets.
“Given research points to challenges that will not simply dissipate with a stronger world economy, the message for both manufacturers and policy makers is that their response cannot be ‘business as usual’. Industrial strategy must create the competitive conditions for companies exporting from the UK, whilst ensuring tariff-free access to trade with our biggest and nearest market and helping deliver future trade liberalisation will be key to the UK’s future trading success.”
The survey, from March 2017, covered 291 companies.